THE first package of Tax Reform for Acceleration and Inclusion proposes to put zero-rates for personal income taxpayers who make less than P250,000 annually, or 83 percent of our population, said a Department of Finance (DOF) executive during the Tax Reform Roadshow held in Microtel Inn & Suites Saturday.
The Tax Reform Measure, particularly House Bills 4774 and 4888, is needed to fund the ten-point socioeconomic agenda of President Roa-Duterte and to lower the poverty rate of the Philippines by 2020, said Department of Finance Strategy and Economics and Results Group Undersecretary Karl Kendrick Chua.
He said one of the objectives of the tax reform for acceleration and inclusion is to reduce the poverty rate of the Philippines by 2020 from 21.6 percent to 14 percent, uplifting some 6 million Filipinos from poverty.
It was also created to help increase gross national income (GNI) of the Philippines from US Dollars 3,500 (USD) to USD 4,100 where Thailand and China are currently.
The first package of House Bill 4774 “seeks to lower personal income taxes (Pit), broadening the VAT base, adjusting excise taxes on petroleum and automobiles, and reducing the estate and donor’s tax.”
The proposed tax schedule, which is to be implemented by the second half of 2017, 2018, and 2019 once the bill is passed, states Filipinos making 250,000 to 400,000 annual income, which is 8 percent of the population, will have a 20 percent tax rate.
For those making 400,000 to 800,000 annual income will have 25 percent tax rate, 30 percent tax rate for those earning 800,000 to 2 million per year. Thirty two percent tax rate will also be given to those taxpayers earning 2 million to 5 million per year. And finally a 35 percent rate will be imposed to those earning more than 5 million annually.
As taxes coming from personal income will be limited, the tax reform proposes limiting the exemptions.
“A number of exemptions will be removed, unless sold by firms whose gross sales fall below the VAT threshold,” he presented.
Included in these exemptions will be those found in most special laws, except senior citizens and Persons with Disabilities (PWDs), exemptions from cooperatives except those selling raw agriculture produce. They are also looking into removal of low cost and socialized housing tax exemption, lease of residential units, power transmission, domestic shipping importation, and the boy scouts and girl scouts.
The VAT zero-rating will also be limited to direct exporters “who actually export goods out of the country.” Zero-ratings for indirect exporters, suppliers, and agents will be removed.
“We want to graduate this country from the current low middle income country status to a upper middle income country status,” said Chua. The roadshow in Davao City is the first in the Philippines which would be followed after by Puerto Prinsesa, Bohol, and Makati.
Currently, around 60 congressmen nationwide support of this tax reform. (JPA)